TCRA may get large percentage of money owed by bankrupt airlines

BLOUNTVILLE - Members of the Tri-Cities Regional Airport Commission were in a show-us-the-money mood during a called meeting Tuesday to deal with airline bankruptcy debt totaling nearly $131,000.

Commissioners authorized TCRA Executive Director Patrick Wilson to accept "the most favorable terms" for a buyout of the debt created by the Comair, Northwest and Mesaba airline Chapter 11 bankruptcy filings.

The airlines, under contract arrangements, pay the airport landing fees and rent to do business at TCRA.

One offer from a claims liquidation company indicates TCRA could recover 87.5 percent of about $61,000 owed by Mesaba, which does business at TCRA as Northwest Airlink for Northwest Airlines. A separate offer says the airport could get 70 percent of nearly $70,000 owed by Comair, a Delta Connection airline.

"The two offers on the table are considerably higher than any previous offer made," TCRA Finance Director Cathy Smith said in a memo to commissioners. "These offers would improve our cash position, and even if a portion of these funds need to be escrowed for possible contingencies, we could draw interest on them."

Smith indicated other cash buyout offers ranged from 25 percent to 50 percent, in addition to offers of airline stock.

"What we get out of these bankruptcies is usually a lot lower than our claim," attorney Scott Powers, who has been handling bankruptcies for the airport, told the commission.

In fact, TCRA recovered less than $60,000 from about $230,000 in claims resulting from two US Airways bankruptcy filings in recent years, according to Smith.

"Our experience has been pretty poor in bankruptcies," noted Commissioner John Gillenwater of Bristol, Tenn.

While commissioners appeared more interested in recovering cash, they were told that the airport accepting stock as part of a settlement would create legal problems. TCRA's commission is technically not an independent governmental entity, although the airport is owned by area cities and counties.

"In the end, if you get stock, we're not real sure what you do about it because you are not an entity," TCRA legal counsel Bill Bovender told commissioners. "The owners of this airport cannot own stock under state law. I'm not even sure how a (stock) share would be issued. It's a real problem."

Commission Chairman John Abe Teague encouraged commissioners to "pull the trigger" on the cash buyout offers and move forward.

Still, Powers suggested the buyout percentages are a "moving target" until the airport has signed agreements.

While the bankruptcies are yet another example of volatile airline industry economics, Commissioner Dan Mahoney of Johnson City sounded encouraged by the buyout offers.

"This should make you feel better about these airlines ... that they're not ready to liquidate," Mahoney said.